Beneath Their Olympian Gaze
An interesting parallel between AG Holder’s (AKA Mark Rich’s flack) and Jon Corzine’s testimony at different hearings in the House this week.
Holder said he is “ultimately responsible for everything that happens in the Department of Justice” but that it is unrealistic to think he is aware of every investigation — even those that could have international ramifications such as the outrage in Mexico over Fast and Furious.
“There are all kinds of operations going on right now in the Justice Department about which I know nothing [Sergeant Schultz again!] because of the way the Department of Justice is structured,” he said.
“I never intended to break any rules. I’m not in a position given the number of transactions to know about the movement of any specific funds. I certainly would never intend to have segregated funds moved,” said Corzine.
. . . .
In his testimony, Corzine distanced himself from some hands-on aspects of the firm’s business practices.
“Even when I was at MF Global, my involvement in the firm’s clearing, settlement and payment mechanisms and accounting was limited,” Corzine said.
“I was stunned when I was told on Sunday, October 30, 2011, that MF Global could not account for many hundreds of millions of dollars of client money.” [It would have been much better had he said “I was shocked! shocked!”]
Guns used to kill hundreds walking across the border with not just the cognizance of Federal “law enforcement” officials, but their active connivance. A mere billion dollars walking out the door, and vanishing into thin air. Details. Details. Far beneath the Olympian gaze of progressive titans such as Eric Holder and Jon Corzine.
So riddle me this: how can one take seriously their progressive promises to look out for the little people when they apparently know little and couldn’t care less about what the little people that work for them do?
Maybe I’m missing something, but Corzine was hands-on with respect to the trading strategy that lost the money, lobbying to keep it off balance sheet / secret, spinning when it became public, attempting to maintain the firm on life support and sell it.
What’s Holder’s connection? Did he have any reason to be involved or anything to gain? Some cowboy cops with a dangerous harebrained scheme, poorly executed and supervised, seems more comparable to someone in a bank department embezzling some money.
I could be missing something. But if two guys say they weren’t directly involved, and one is a criminal who was directly involved, it doesn’t make the other a criminal. It’s guilt by association, where there is no association.
Comment by curmudgeonly troll — December 10, 2011 @ 10:11 am
Do you know anything about the operations of options/futures brokerage, clearing and settlement? It is an arcane operational specialty and I’m sure that many financial firms with those kind of operations have CEOs that aren’t involved in the operations of that aspect of the business in detail, on a daily basis. Worse yet, Corzine was brought on board to diversify MF away from that business – he doesn’t have a background in exchange traded derivatives operations, and nobody hiring him thought he did. Accordingly, Corzine’s posture is nothing like Holder’s comments. Holder is lying. Watch his testimony and q&a with various congressmen – he dissembles, prevaricates and avoids, giving non-denial denials by the boatload. Corzine did nothing of the sort. Your analogy is nonsense.
Comment by Glenn — December 10, 2011 @ 12:21 pm
1. Uhm, yes, actually. In a few days there will be some public validation of that, BTW. Stay tuned. 2. If you’re CEO of a brokerage firm, you should have at least some knowledge of it. Every freaking FCM CEO I know and have known is intimately aware of that business. And I know more than a few. 3. The CEO has a fiduciary duty to customers which he cannot carry out if he is ignorant of the company’s main responsibility. 4. Even if he was trying to transition the company to something else (a dubious endeavor to begin with), that doesn’t relieve him of responsibility for running its existing core business in a competent way. 5. I agree Holder is a liar and was lying. So what if Corzine wasn’t? Then that means he was merely grossly negligent, and thought that “it was beneath me” is an legit excuse. It’s not. Both are using the “beneath me” excuse to escape accountability for doing their jobs in a responsible and ethical way.
Professor – if negligent the term under law that should apply is reckless indifference. The idea that someone isn’t doing a cash and securities rec of the collateral accounts on a daily basis along with intra-day tracking in periods of high volatility is absurd. The idea that this data was not available to the risk management group boggles the imagination. That the CEO who was by some reports running the euro book wouldn’t look at this stuff beggars belief. All righty then, I have run out of words to describe the arrant nonsense Corzine spouted off. For the love of God (I was wrong!) Corzine was a TRADER – he knew how to run a book. Even if he had forgotten, he should at least know what dissembling sh*ts some traders can be when the mark is running against them. This dark and mysterious nature of trade book finance is really a load of crap hidden behind jargon, and made opaque by accounting rules. However, anyone who understands that price plus ai times quantity equals value, that the price must be real (valuation versus evaluation) and the quantity verified, can cut through the crap.
Comment by Sotos — December 10, 2011 @ 1:16 pm
Trying once again to post this very a propos clip from Casablanca:
http://www.youtube.com/watch?v=T1DEG6BWgp0
Party on!
Comment by markets.aurelius — December 12, 2011 @ 9:17 am
This is a common problem for all large bureaucracies. The problem is not that any one person, including the CEO or equivalent, is not aware of everything that is going on. No one can. The issue is that the important things MUST be reported to that person. The problem is that someone in the organization MUST be held accountable (i.e. if something like that happens on his watch, it is a fireable offense) to prevent such things in the first place. Furthermore, there must be policies in place that say that if XYZ happens, then it must be reported to the following people immediately. This provides the necessary checks. Holder might not have directly known, but someone had to, and that someone must report it to his supervisor and upwards to the chain until Holder DOES know.
In a properly organized bureaucracy, someone would have known beforehand that he must immediately notify AG Holder or CEO Corzine about what happened. If someone wasn’t watching that, if there was no kind of internal audit in place to make sure such things are being reported, or if someone deliberately failed to tell the big boss, then there is a big problem.
Obviously as CEO, Corzine is completely responsible for what happened. There is no reason why he couldn’t of known that. He had the power to make sure people knew they had to report such issues to him and the responsibility to do so. A CEO typically has carte blanche to do anything he likes with his company. Certainly huge financial holes should have been detected by either him or a financial officer that reported directly to him. It is unbelievable that any CEO could be so clueless.
With AG Holder I am not so sure because there may be limits to what he can do in a government bureaucracy. Could he have made the changes, or was he constrained in some way because of existing laws? Did he get rid of safeguards that previously existed? Or did not such safeguards ever exist? Or did they, but they were removed by a previous administration? Is it reasonable to expect that he (and all other new Cabinet officials in every administration) to review his department to make sure such safeguards are in place? More important, is he now addressing these issues so that future safeguards are in place?
FDR sacked Admiral Kimmel and General Short because of the Pearl Harbor attack. There is much debate whether such sackings were really justified given everything that happened. In terms of some kind of cosmic justice, it may not have been. But by sacking them, everyone knew there would be penalties for such screw ups – someone would be held responsible, and failures would not be tolerated. Important generals and admirals kept getting sacked too – some with justification (Fredendall, Ghormley), some perhaps not (Fletcher) – but it sent a powerful message that such things needed to be done, and that important heads couldn’t use ignorance as an excuse for failures. That insured the next guy would make it his business to prevent such things.
So there is definitely reason AG Holder should resign or be fired. However, if he isn’t, it’s just politics as normal in DC. Bush didn’t hold anyone responsibile for the 9/11 attacks; Clinton did hold anyone responsible for Waco. How long has it been since a President sacked a Cabinet official for a huge screw up?
Comment by Chris Durnell — December 12, 2011 @ 1:17 pm